Mortgage Monday: How Much Down Payment Do You Really Need in 2025?

Think you need 20% down to buy a home? Think again. In this “Did You Know” segment of The Pulse and Perspective, Pete D’Angelo breaks down exactly what down payments look like in today’s market—by loan type, property type, and buyer profile. Whether you’re a first-time buyer, real estate investor, or just planning your next move, this episode clears up common myths and uncovers powerful options you may not know about.

Pete walks through minimum requirements for conventional, FHA, VA, USDA, and non-QM loans—and explains why 3% down might actually be your best move (or your worst). Plus, learn how credit scores, property types (like multi-family and second homes), and even mortgage insurance factor into how much you should put down—not just what you can.

This is your practical, real-world guide to down payments in 2025. 🎯

#mortgagemonday #downpayment2025 #firsttimehomebuyer #realestateeducation #homebuyingtips #FHAloans #conventionalloans #VAloans #nonqm #mortgageexplained

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Peter D'Angelo | NMLS: 885309 | Branch Manager | Guaranteed Rate, Inc., NMLS 2611
Peter.DAngelo@Rate.com

*All information, topics, discussion is my own personal opinion and insight, not reflective of Guaranteed Rate, Inc. May contain market information for informational purposes only, not to be used as financial advice.

Transcript

Podcast_DYK_DOwnPAYment_07.24.2025

 [00:00:00] 

Welcome back to the Pulse and Perspective. I am your host, Pete D'Angelo. I hope you're doing well. Today is a did you know segment? We're going to deep dive into down payments. So today we're gonna talk about down payment requirements through a couple different perspectives. We're gonna talk about loan programs available and what their minimum down payments are generally.

Then we're going to zoom in. We're gonna look at different. Purchase scenarios, whether you're gonna purchase a primary residence, second home or investment property with respect to the loan programs that are available to do so and what those minimum down payment requirements are. Now asterisk at the top.

Disclaimer, these are all subject to change. This cannot be evergreen, but. Right now as of recording this, in July of 2025, these are what the minimum down payments are for the different loan programs. So we're gonna start [00:01:00] off with conventional loans. Conventional loans permit as low as 3% down. Four, your minimum required down payment.

There are some credit score implications for these different loan programs that I'll also mention. So for conventional six 20 and Up would need to be your credit score to have access to the loan program. Moving on to FHA minimum down payment for FHA three and percent down. Again, this is generally speaking for these loan programs, three and a half percent down.

But that is also credit score dependent. Five 80 credit scoring up three and a half percent down is available to you if you have 500 to 5 79 on your as your credit score. Your minimum down payment requirement for an FHA loan is 10%. Next, we're gonna talk about VA loans. VA loans are for our veterans.

These are loans specifically designed to assist our service members. Active duty reserve. [00:02:00] Or discharged and were retired from the military, have access to VA loans, and your down payment could be 0%, and that's something that is a function of the entitlement. That's an entitlement. Benefit. Engineered and created from the Department of Veterans Affairs for our veterans, so va.

The other one that has 0% down payment possibility are USDA loans. So USDA is United States Department of Agriculture, and this is specific to a market area. That's specific to designated rural areas, number one and number two, whether or not you have access to 0% down will depend on your income. So there are income limits if you make over a certain amount, then there's a different minimum down payment requirement.

Lastly, the non QM loans. I'm starting to add these in every time we're talking loan programs. Non QM loans are becoming a lot more popular, and with that being said, they do carry with them different requirements for down [00:03:00] payment. 10% is the minimum. I will say with all of these, and I'm taking my opportunity here with the non QM loans for particular purpose, with all these, I'm sharing what the minimum requirement is, what's going to be the minimum.

Most beneficial for you and your scenario will be different. So I just wanna make mention of that because for non QM loans, even though you have 10% as your minimum required, in some scenarios, you may be better served by actually having a higher down payment. And that concept applies to all of these. Now we're going to move on to the actual property types to contextualize it.

From the program perspective within that. So now we're gonna first talk about purchasing a primary residence. You're gonna buy a home you're gonna live in, right? Conventional loans, minimum down payment for first time home buyers is 3%. Oh. Myth busted. What myth am I talking about? Most [00:04:00] people think FHA loans are your lowest down payment option, FHA loans are commonly promoted and marketed as first time home buyer programs.

However, the lowest possible down payment you can make if you're not a veteran or have a specific market area like USDA loan. We're just looking at FHA conventional. Your lowest down payment opportunity as a first time home buyer is a conventional loan. 3% is the minimum for that. That also is for fixed rate mortgages.

If you're going to obtain an adjustable rate mortgage for a conventional loan, purchasing a primary residence, your minimum down payment requirement's going to be 5% commonly. Most people do put 5% down as the down payment for a primary residence, conventional loan. I also wanna make mention of multi-family properties.

If you're going to purchase a primary residence, you're going to live in it, but there's two to three to four units that [00:05:00] minimum down payment as of last year. Remains consistent. You can purchase a multifamily home with as little as 3% down, three to 5% down if you are a first time home buyer. If you're not a first time home buyer, the minimum is 5%.

Okay? That also means that you can own another home and be moving, and let's say you vacate that home, you're gonna rent it, you're gonna move to a new home. 5% down is your minimum. You do not need to put 10, 15, or 20% down as a minimum. You can. Qualification permitting. Put 5% down for a primary residence purchase for an FHA loan.

3.5% down is your minimum, but then it steps up if your credit score is between five hundred and five seventy nine to 10%. VA loans, 0% primary residence. Now VA loans, this is the only opportunity. You can only use a VA loan for a primary residence's purchase. 0% down [00:06:00] USDA same deal, but instead of it being just for primary residences USDA is in designated rural areas and falling within income limits.

Now, for the non QM loans, purchasing a primary residence 10% down is a minimum. At rate, we offer 10% down non QM loans. For primary residences, but what's gonna be most advantageous? I would set your expectation between 10 to 15, 20% down. Understand that interest rates, and I wanna take this opportunity here because when we buy primary residences, that's we're setting up what our monthly housing cost is, when it comes to these down payment requirements, if you're putting the minimum down, interest rates are risk based priced. That means that the elements of the loan file, credit score down payment amount down payment amount will influence what the interest rate is if you're putting the minimum down.[00:07:00] 

Don't expect to have the absolute best interest rate possible at that time. The lowest down payment is also going to be the riskiest for the lender, and they're going to price that accordingly. Now, if you've got an excellent credit score, you're gonna be fine, and maybe you will have access to the best interest rate with a minimum down payment percentage.

But bear in mind, your down payment amount does affect your interest rate. Moving along to second homes, conventional second homes, you can purchase with as little as 10% down, commonly as 15% down, but the minimum is 10% down. But there are stricter guidelines that apply to the second home. Things like distance from your current primary residence, things like that.

FHA, VA USDA, not allowed. Generally there's. Very specific circumstances in FHA. I've never come across that in my career, but setting your expectations appropriately here. F-H-A-U-S-D-A, VA [00:08:00] exclusive primary residence loans, investment properties, we are looking at conventional and non QM at this point, right?

Because F-H-A-V-A-U-S-D-A, they're not applicable. You cannot use those loans to purchase investment property. So conventional. This is where it's a little tricky. You can purchase a single family investment property with a conventional loan with 15% down. It's not advisable. It's not advisable for a few reasons.

Reason number one. Woo, interest rate. Reason number two, mortgage insurance. Brief refresher. If you put less than 20% down, you will have mortgage insurance. Mortgage insurance is an insurance premium that protects the lender in the event of the borrower defaulting. It's something that does not protect the homeowner.

The borrower. It's something that protects the lender and it's a monthly cost. FHA loans carry mortgage insurance premiums. Across, no matter what you [00:09:00] do, and in conventional loans, mortgage insurance premiums are normally in the less than 20% down. I mean, that's what the guideline provisions for. It is a monthly cost, or you can elect to pay it upfront in certain scenarios 

now to bring it back to investment properties, that's where it gets really costly. And if you're buying an investment property, you're investing in real estate, you want cash flow. Cash flow means you're gonna want to be making money on the property and if you increase what that cost is for the property, Ooh.

Yeah. Even though you could buy with 15% down, real world implications are not, they won't be very effective and you may not have the cash flow that you would desire from an investment property when it goes to multifamily for conventional investment property purchases, and that's when we have 25% down as our minimum.

Keep that in mind when you're shopping and if you are interested in investment properties that you may be able to purchase like a two family home with as little as 20% down, but really multi-family, 25% down [00:10:00] is your minimum for conventional. When it comes to the non QM space, that's where we see the minimum jump up.

For investment properties, we're looking at 20 to 30% down. Non QM loans do have some different guidelines and different ways to qualify to purchase. We talked in past episodes about debt service coverage ratio loans. This is where qualification is strictly based on the cash flow of the property and.

The minimum could be 20 to 30% down from the non QM loan, but to qualify, you may need to be putting close to 30% down. When I'm working with families that are interested in investing in property as investments, well I'm normally recommending out the gate, if it's an investment property, you're gonna wanna be offering 30% down.

Unless you're purchasing a property that you're gonna rehab and you're getting the property below market value right now, if you get it below market value, you're gonna put some work in and renovate it and then get higher rent. That could make sense, but by and large you kinda wanna prepare for [00:11:00] 30% down for non QM loans.

I mentioned about credit scores. We talked about FHA and conventional loans, and how FHA has different bans. The credit scores also will impact your mortgage insurance. When it comes to conventional loans, credit scores directly impact. And when it comes to FHA loans, it's a framework guideline. So it's not particular to each individual.

And the mortgage insurance is required when you're putting less than 20% down. So bear that in mind. VA loans do not have mortgage insurance premiums. So this is exclusive to FHA and conventional loans. So let's do brief recap. Conventional loans as little as 3% down, generally right? Depending on the scenario here.

FHA as little as 3.5% down lower credit scores, you're gonna need 10% down VA, USDA qualification permitting, goose egg [00:12:00] 0% down, and then non QM loans 10% down as a minimum. General rule of thumb. I hope you found this helpful and useful. I will be back later this week for an update episode for you to get a check on the temperature here on the real estate market and mortgage rates and what's developing.

If you have any questions, comments, concerns, or anything that you'd be interested in me deep diving on, please reach out to me. You can actually find me on Instagram at Lone Pro Pete, so find me on Instagram at Lone Pro, Pete. DM me, follow me. I'd love to hear from you and also provide you with any information that you may be particularly interested in.

If there's anything else I can do for you or your families, you're encouraged to reach out. Otherwise, I hope you all have a wonderful week ahead and take good care. [00:13:00]